An Analysis of Brexit – Part 1: How the HR Industry in the UK and EU have been affected by Brexit

Following the referendum held in the United Kingdom (UK) in 2016, it was determined, by majority vote, that the UK would no longer be a part of the European Union (EU). Now the two-year ratification process is coming to a close and major changes will be taking place shortly, unless another extension for the process is granted. It is hoped that the full transition period will be complete by the year 2021.

The United Kingdom has been a part of the EU since 1973 (then called the European Communities). After being a part of the EU for approximately 43 years, it is unavoidable to expect some major changes to the rules of employment for people who are from the UK in comparison to those that have transferred from other EU countries.

The estimated impact of Brexit is evaluated at over 200,000 lost jobs by the time the country has fully split from the EU. These jobs are anticipated to represent a total of £6 billion in annual lost wages. It is certain that any major change like Brexit would be devastating to a variety of markets. However, we won’t know the full extent of the damage and impact until all of the new legislation is in place for a period of time.

Human resources will be kept very busy over the next few years as new legislation comes out regarding the status of EU Nationals who are currently working in the UK. In 2017, there were approximately 1 million EU nationals who were working in lower skill set areas in the UK, accounting for a huge proportion of those in hospitality, construction and food processing. As with any employee departure, finding, training and on-boarding new employees costs a lot of money and is also a large time investment for any organization. With the working status of 1 million workers up in the air, it is imperative that organizations potentially affected by the proposed changes are ready to implement rapid job replacement measures.

As the transition period ends, it is expected that the UK will adopt new worker immigration policies more like those of other countries when it comes to hiring foreign workers. There are currently qualification rules for skilled workers from non-EU countries and these rules are likely to be applicable to EU countries once Brexit is complete. Additionally, there will be more regulations created for those who have been living and working in the UK for at least 5 years (regardless of skill level) and who now have an existing right to remain in the country.

The UK’s overall working population may decrease because so many jobs are slated to be reduced or have already been eliminated. Additionally, with the implementation of Brexit, the UK will lose its current ability to easily hire anyone from the EU.

It is expected that with the proposed changes, Brexit will have a larger likelihood of affecting HR administrators more than the actual employees of these organizations. With many of the potential changes, HR departments will be required to revamp and update their hiring practices, training tools, and will also be responsible for seamless updates to their organizations throughout this changing and uncertain period. With fewer workers available, and more low-skilled jobs opening up, how are human resources teams preparing for the upcoming changes in the UK employment market?

In an upcoming article, we will examine some of the above ideas and proposed changes British HR departments should employ to counteract the changing labor market to help keep their organizations running smoothly and efficiently.

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